1201 Monthly market wrap v2 - DBS Bank Market Focus Monthly market wrap Page 2 ETF flows Hong Kong and H-share ETFs saw inflows of HK$0.3bn in November. This is the first inflow seen

sa- AH

Improved risk-reward after Nov

Overall fundamentals are still weak, but risk-reward is improving after November correction

We favor sectors that have better earnings outlook in shaky macro conditions

We have added Tencent and CR Land to our top ten list

Risk-reward is improving after November correction. The HSCEI was the worst performing major global index in November, giving back more than half of October’s gains. The market may still have a negative bias in the near term due to MSCI rebalancing flows, Fed rate hike overhang, and unwinding of A-share support measures. But risk-reward is improving. Rebalancing flows should be less of a factor after the first week. Last night’s SDR weight is also slightly above our forecast of 10%. The 39 ETFs that invest in Hong Kong and H-shares saw inflows in November (pg 2). Our 3 month and 12 month HSI targets are 23,292 and 26,049 (pg 6).

Overall fundamentals are still weak. HSI members saw 0.6% and 2.0% cuts to their 2015 and 2016 earnings estimates in HKD terms during November. HSCEI members saw steeper cuts of 1.6% and 2.7% for the same periods. CNY’s 1.1% depreciation and poor 3Q trends were key culprits. Among index stocks, autos and companies with upbeat 3Q results (Lenovo, China Mobile, Belle, Sinopharm) saw best revisions in 4Q (pg 10). On the flip side, commodities, materials, China Life, HKEX, and Unicom saw worst revisions (pg 12).

SDR weight is slightly above our forecast. We estimate CNY’s SDR inclusion at 10.92% weight will induce direct CNY demand of US$30.6bn. More importantly, inclusion should increase appetite for CNY assets in the longer run. This supports CNY outlook and lowers financing costs for China.

Favor rate cut beneficiaries and new economy sectors. Given China’s still shaky macro outlook, we favour two groups that have better earnings outlooks. We expect there will be a Dec PBOC rate cut, hence we like China properties and infrastructure as beneficiaries. We also like internet, software and environmental as sectors that can outgrow slow macro conditions. These are part of our 3 themes for 4Q (pg 17).

Adding Tencent and CR Land to top ten. We are switching out COLI for CR Land as our China property pick, mainly because CR Land offers a more favourable valuation relative to its NAV. We are also adding Tencent back into our top ten, as US ADR inclusion should be less of an overhang. Our top ten picks fell 3.4% in November and underperformed the HSI (pg 19). Main drags were our new laggard picks, which continued to lag as fundamentals did not support their rebound yet. We have removed Galaxy Entertainment in this update, as we await for more evidence for a mass market driven GGR recovery.

HSI: 21,996 ANALYST Alexander LEE CFA, +852 2971 1930 [email protected]

Ian CHUI [email protected]

Performance of key indices

A s o fInd ic es 11 - 30 1 w eek 1 mont h Y T D 2014A siaHSI 21,996 (3.0) (2.8) (6.8) 1.3 HSCEI 9,791 (4.3) (5.8) (18.3) 10.8 HSCCI 4,050 (2.7) (2.3) (6.9) (4.5) Shanghai Comp. 3,445 (4.6) 1.9 6.5 52.9 Shenzhen Comp. 2,204 (2.9) 9.4 55.7 33.8 CSI300 3,566 (5.0) 0.9 0.9 51.7 NIKKEI 225 19,747 (0.7) 3.5 13.2 7.1 KOSPI 1,992 (0.6) (1.8) 4.0 (4.8) Taiex 8,321 (1.9) (2.7) (10.6) 8.1 STI 2,866 (1.3) (4.4) (14.8) 6.2 KLCI 1,668 (0.2) 0.1 (5.3) (5.7) SET 1,365 (2.1) (2.1) (8.8) 15.3 J CI 4,520 (0.5) 1.5 (13.5) 22.3 Sensex 26,157 1.3 (1.9) (4.9) 29.9 O t hersDow J ones 17,798 0.0 0.8 (0.1) 7.5 S&P 500 2,090 0.2 0.5 1.5 11.4 Nasdaq 5,128 0.5 1.5 8.3 13.4 F TSE 100 6,347 0.7 (0.2) (3.3) (2.7) DAX 30 11,310 2.0 4.2 15.3 2.7

% c hange

Source: Bloomberg Finance L.P., DBS Vickers

DBSV Top Ten Buy List

Closing T gt

T ic k er p ric e PBV PER y ield RO E Pric e(HK $ ) (X ) (X ) (% ) (% ) (HK $ )

Belle 1880.HK 6.78 1.7 9.5 6.3 19.0 9.55CMB 3968.HK 18.22 0.8 5.2 5.8 17.5 26.82CR Land 1109.HK 20.85 1.0 9.9 2.7 10.9 24.98CH Rail. Constr. 1186.HK 10.30 0.9 8.3 1.8 11.3 13.55GZ Auto 2238.HK 7.42 1.0 9.6 3.1 10.4 8.30Haitong Sec* 6837.HK 13.38 1.1 9.0 3.2 13.9 n.a.PetroChina* 857.HK 5.51 0.7 14.1 3.1 4.7 n.a.Sinopharm 1099.HK 32.55 2.2 17.4 1.5 13.4 34.00Tencent 700.HK 154.30 8.5 27.4 0.5 31.4 184.00V alue Partners 806.HK 9.15 3.4 11.8 4.9 31.6 12.20

F Y 16F

Source: Bloomberg Finance L.P., DBS Vickers Based on closing prices on 30 November, 2015

DBS Group Research . Equity 1 December 2015

China / Hong Kong Market Focus

Monthly market pulse Refer to important disclosures at the end of this report

Market Focus

Monthly market wrap

Page 2

ETF flows

Hong Kong and H-share ETFs saw inflows of HK$0.3bn in November. This is the first inflow seen since July 2015, and marks the second consecutive month of flow improvement since outflows maxed at HK$2.3bn in September. Offshore A-

share ETFs, however, saw outflows of Rmb 8.5bn, likely on profit taking. This is the first month of outflows after inflows seen during August to October.

Global listed HK ETF flows and HSI performance

Offshore listed A-share ETF flows and SHCOMP perf.

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

(10)

(5)

-

5

10

15

20

25

Jan/14 Jul/14 Jan/15 Jul/15

HK and H-shr ETF flows (LHS)

HSI monthly perf. (RHS)

(%)(HK$ bn)

-15.0

-10.0

-5.0

0.0

5.0

10.0

15.0

20.0

(40)

(30)

(20)

(10)

-

10

20


Offshore A-shr ETF flows (LHS)

SHCOMP monthly perf. (RHS)

(%)(HK$ bn)

Sources: Bloomberg Finance L.P., DBS Vickers

Global listed HK and H-share ETF flows and HSI

20,000

21,000

22,000

23,000

24,000

25,000

26,000

27,000

28,000

29,000

30,000

(1,000)

(500)

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15 Apr/15 Jul/15 Oct/15

HK and H-share ETF flows HSI (RHS)(HK$ m)


Market Focus

Monthly market wrap

Page 3

Offshore A-share ETF flows and SHCOMP index

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

(4,000)

(3,000)

(2,000)

(1,000)

-

1,000

2,000

3,000

4,000

Jan/14 Apr/14 Jul/14 Oct/14 Jan/15 Apr/15 Jul/15 Oct/15

A-share ETF flows SHCOMP (RHS)(Rmb m)


Northbound stock connect daily quota usage

Southbound stock connect daily quota usage

-120%-100%-80%-60%-40%-20%

0%20%40%60%

Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 -40%

-20%

0%

20%

40%

60%

80%

100%

120%

Oct-14 Jan-15 Apr-15 Jul-15 Oct-15

(% of daily quota of Rmb 10.5bn)


*Daily quota usage = (Daily quota – daily quota balance)/(daily quota)

Market Focus

Monthly market wrap

Page 4

US 10yr treasury yield

HK$

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

08 09 10 11 12 13 14 15

(%)

7.740

7.745

7.750

7.755

7.760

7.765

7.770

7.775

7.780


Sources: Bloomberg Finance L.P, DBS Vickers

Short selling activity and HSI

Short selling activity and HSI (2007-2009)

2000021000220002300024000250002600027000280002900030000

6%

8%

10%

12%

14%

16%

18%

Jan/14Apr/14 Jul/14Oct/14Jan/15Apr/15 Jul/15Oct/15

SST as % of turnover HSI (RHS)(%)

1000012000140001600018000200002200024000260002800030000

3%

5%

7%

9%

11%

13%

15%

17%

Jan/07 Jul/07 Jan/08 Jul/08 Jan/09 Jul/09

SST as % of turnover HSI (RHS)(%)


Market Focus

Monthly market wrap

Page 5

HSI 1 year forward PE bands – 5yr mean and standard deviations

8,000

13,000

18,000

23,000

28,000

05 06 07 08 09 10 11 12 13 14 15 16 17

HSI 5 yr mean of 1 yr forward P/E +1 std -1 std +2 std -2 std12.9x

11.7x

10.5x

9.3x

8.1x


HSCEI 1 year forward PE bands – 5yr mean and standard deviations

-

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

05 06 07 08 09 10 11 12 13 14 15 16 17

HSCEI 5 yr mean of 1 yr forward P/E +1 std -1 std +2 std -2 std

5.9x

10.7x

9.5x

8.3x

7.1x


CSI 300 1 year forward PE bands – 5yr mean and standard deviations

-

1,000

2,000

3,000

4,000

5,000

6,000

05 06 07 08 09 10 11 12 13 14 15 16 17

CSI300 5 yr mean of 1 yr forward P/E +1 std -1 std +2 std -2 std

16.8x

14.5x

12.2x

9.9x

7.6x


Market Focus

Monthly market wrap

Page 6

HSI targets

15,000

17,000

19,000

21,000

23,000

25,000

27,000

29,000

10 11 12 13 14 15 16

HSI 3M target 12M target

26,049

23,292

Tgt PE =11.1x

Tgt PE =11.6x


HSCEI targets

8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

16,000

10 11 12 13 14 15 16

HSCEI 3M target 12M target

12,453

10,788

Tgt PE =8.5x

Tgt PE =7.8x


Market Focus

Monthly market wrap

Page 7

Earnings forecasts and revisions

Overall earnings forecasts continued to trend down in November. This was sparked by poor 3Q results and CNY depreciation.

Best revisions in 4Q:

- Commodity users such as airlines

- Autos on better sales and inventory trends

- Companies with upbeat 3Q results: Sinopharm, China Mobile, Belle, and Lenovo

Worst revisions:

- Commodity producers like oil and coal

- Materials companies due to ASP trends and slow pick up in property FAI despite strong pre-sales

- HKEX due to falling ADT expectations

- Companies with disappointing 3Q trends such as Tsingtao, China Life, and Unicom

Revision trends for HSI consensus earnings

Revision trends for HSCEI consensus earnings

1,800

1,900

2,000

2,100

2,200

2,300

2,400

2,500

2,600

2,700


2014 2015 2016

1,200

1,300

1,400

1,500

1,600

1,700

1,800


2014 2015 2016


Market Focus

Monthly market wrap

Page 8

Consensus forecasts for HSI members

HSI 2014 2015 2016 2015 2016China banks BoCom HK3328 1.12 1.07 1.08 -4.7% 0.7%

BOC HK3988 0.77 0.71 0.72 -8.2% 1.6%ICBC HK1398 0.98 0.94 0.96 -4.2% 2.3%CCB HK939 1.15 1.11 1.14 -3.1% 2.3%

HK banks BEA HK23 2.72 2.33 2.41 -14.4% 3.4%BOCHK HK2388 2.30 2.47 2.69 7.3% 8.8%Hang Seng Bank HK11 7.91 11.76 9.93 48.6% -15.5%HSBC HK5 5.35 6.28 6.05 17.3% -3.6%HKEX HK388 4.44 6.85 7.23 54.3% 5.6%

Insurance China Life HK2628 1.43 1.90 2.02 32.7% 6.2%Ping An HK2318 3.10 3.70 3.87 19.2% 4.7%AIA HK1299 2.25 2.36 2.69 5.0% 14.1%

Telcos China Mobile HK941 6.77 6.79 7.21 0.3% 6.2%China Unicom HK762 0.68 0.64 0.63 -5.9% -2.0%

Oil PetroChina HK857 0.74 0.32 0.37 -57.0% 15.7%Sinopec HK386 0.50 0.39 0.47 -21.4% 19.8%CNOOC HK883 1.70 0.57 0.66 -66.4% 14.9%

Coal China Shenhua HK1088 2.45 1.41 1.41 -42.4% -0.1%China Coal HK1898 1.54 0.80 0.88 -48.3% 11.1%

Gas Kunlun Energy HK135 0.70 0.51 0.58 -27.7% 14.8%Towngas HK3 0.61 0.66 0.72 7.5% 9.1%

Power CLP HK2 4.44 4.38 4.58 -1.4% 4.5%China Res Power HK836 1.94 2.69 2.55 38.8% -5.2%Power Assets HK6 7.88 3.63 3.75 -54.0% 3.6%

HK property MTR HK66 2.13 1.85 1.59 -13.0% -14.1%SHK Land HK16 8.53 7.36 8.61 -13.7% 16.9%Henderson Land HK12 5.11 2.84 3.08 -44.4% 8.4%New World Dev elopment HK17 1.37 0.80 0.80 -41.5% -0.2%Hang Lung Property HK101 2.29 1.36 1.34 -40.7% -1.5%Sino Land HK83 1.01 0.85 0.93 -15.9% 9.3%Llink REIT HK823

China property COLI HK688 3.39 3.14 3.62 -7.3% 15.3%China Resources Land HK1109 1.94 2.12 2.41 9.5% 13.3%

Conglomerates China Resources HK291 (0.07) 0.41 0.45 -680.0% 11.8%Citic Pacific HK267 1.60 2.12 1.93 32.2% -8.9%China Merchants HK144 1.59 1.77 1.90 11.1% 7.8%Swire HK19 7.36 6.81 7.05 -7.5% 3.5%Wharf HK4 3.46 3.79 4.10 9.5% 8.3%

Gaming Galaxy HK27 2.44 1.27 1.42 -47.8% 11.2%Sands China HK1928 2.45 1.37 1.36 -44.0% -0.7%

Tech Lenov o HK992 0.60 0.64 0.41 7.3% -37.1%Tencent HK700 3.25 4.01 5.19 23.4% 29.2%

Transport Cathay Pacific HK293 0.80 1.57 1.71 95.6% 9.1%Cosco Pacific HK1199 0.78 0.82 0.89 5.0% 8.8%

Commerce Li & F ung HK494 0.41 0.36 0.41 -11.2% 11.8%Consumer Hengan HK1044 3.19 3.46 3.84 8.4% 10.9%

Belle Int'l HK1880 0.67 0.68 0.71 1.8% 3.5%Want Want HK151 0.36 0.37 0.39 1.4% 7.4%Tingy i HK322 0.56 0.53 0.62 -5.5% 17.6%

EPS (HK $ ) EPS g row t h


Market Focus

Monthly market wrap

Page 9

Consensus forecasts for HSCEI members

2014 2015 2016 2015 2016

Banks BOC HK3988 0.77 0.71 0.72 -8.2% 1.6%

BoCom HK3328 1.12 1.07 1.08 -4.7% 0.7%

CCB HK939 1.15 1.11 1.14 -3.1% 2.3%

CMB HK3968 2.79 2.83 3.04 1.5% 7.3%

ICBC HK1398 0.98 0.94 0.96 -4.2% 2.3%

ABC HK1288 0.69 0.67 0.69 -3.0% 2.5%

Citic Bank HK998 1.10 1.06 1.08 -4.0% 2.7%

Minsheng HK1988 1.65 1.56 1.62 -5.3% 3.5%

Insurance China Life HK2628 1.43 1.90 2.02 32.7% 6.2%

PICC Group HK1339 0.39 0.50 0.47 27.4% -6.0%

CPIC HK2601 1.54 2.21 2.22 43.3% 0.5%

PICC P&C HK2328 1.34 1.64 1.58 22.3% -3.9%

Ping An HK2318 3.10 3.70 3.87 19.2% 4.7%

Brokers and AM Citic Securities HK6030 1.30 1.88 1.89 44.8% 0.2%

Haitong HK6837 1.01 1.57 1.44 55.7% -8.6%

China CINDA HK1359 0.42 0.52 0.60 22.6% 16.1%

Telcos China Telecom HK728 0.28 0.29 0.31 3.2% 8.7%

Oil and serv ices PetroChina HK857 0.74 0.32 0.37 -57.0% 15.7%

Sinopec HK386 0.50 0.39 0.47 -21.4% 19.8%

China Oilfield HK2883 1.98 0.52 0.63 -73.8% 21.8%

China property Dalian Wanda HK3699 4.88 4.79 6.00 -1.8% 25.1%

China Vanke HK2202 1.80 1.96 2.31 8.9% 17.7%

Power Huaneng Power HK902 0.96 1.08 1.27 12.8% 17.3%

China Longyuan HK916 0.40 0.55 0.65 38.3% 17.2%

CGN Power HK1816 0.21 0.17 0.20 -19.5% 20.7%

Construction and China Railway HK390 0.61 0.64 0.70 4.9% 9.1%

machinery China Comm Cons HK1800 1.08 1.12 1.25 3.7% 11.3%

Cement Anhui Conch HK914 2.61 1.78 1.99 -31.8% 11.6%

CNBM HK3323 1.38 0.54 0.65 -60.7% 19.0%

Coal China Coal HK1898 0.01 (0.22) (0.16) -2340.0% -28.1%

China Shenhua HK1088 2.45 1.41 1.41 -42.4% -0.1%

Autos BYD HK1211 0.23 1.03 1.18 345.7% 15.0%

GAC Group HK2238 0.62 0.67 0.80 8.2% 18.8%

Dongfeng Motors HK489 1.88 1.71 1.87 -8.9% 9.0%

Greatwall Motor HK2333 3.32 1.16 1.31 -65.0% 13.1%

Others Tsingdao HK168 1.85 1.58 1.66 -14.8% 5.4%

Sinopharm HK1099 1.40 1.63 1.92 16.6% 17.8%

Air China HK753 0.39 0.85 0.93 117.4% 9.4%

J iangxi Copper HK358 1.06 0.63 0.71 -40.9% 13.3%

EPS (HK$) EPS growth


Market Focus

Monthly market wrap

Page 10

Best EPS revisions among index stocks in 4Q in HKD terms

Consensus earnings revisions for Lenovo (992.HK) Consensus earnings revisions for Air China (753.HK)

-

0.10

0.20

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

Jan/14Apr/14 Jul/14 Oct/14 Jan/15Apr/15 Jul/15 Oct/15

FY15 FY16(HK$)

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00


FY15 FY16(HK$)

Consensus earnings revisions for BYD (1211.HK) Consensus earnings revisions for Dongfeng Mtr (489.HK)

0.80

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60


FY15 FY16(HK$)

1.50

1.60

1.70

1.80

1.90

2.00

2.10

2.20

2.30

2.40

2.50


FY15 FY16(HK$)

Consensus revisions for CITIC Sec (6030.HK) Consensus earnings revisions for PICC P&C (2328.HK)

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20


FY15 FY16(HK$)

0.90

1.00

1.10

1.20

1.30

1.40

1.50

1.60

1.70


FY15 FY16(HK$)


Market Focus

Monthly market wrap

Page 11

Consensus earnings revisions for Belle (1880.HK) Consensus earnings revisions for China Mobile (941.HK)

0.60

0.62

0.64

0.66

0.68

0.70

0.72

0.74

0.76


FY15 FY16(HK$)

6.0

6.2

6.4

6.6

6.8

7.0

7.2

7.4

7.6

7.8

8.0


FY15 FY16(HK$)

Consensus earnings revisions for Sinopharm (1099.HK) Consensus earnings revisions for GAC (2238.HK)

1.40

1.50

1.60

1.70

1.80

1.90

2.00

2.10

2.20


FY15 FY16(HK$)

0.50 0.60 0.70

0.80 0.90 1.00 1.10

1.20 1.30 1.40

1.50


FY15 FY16(HK$)

Consensus revisions for COLI (688.HK)

3.0

3.1

3.2

3.3

3.4

3.5

3.6

3.7

3.8

3.9

4.0


FY15 FY16(HK$)


Market Focus

Monthly market wrap

Page 12

Worst EPS revisions among index stocks in 4Q in HKD terms

Consensus earnings revisions for CNBM (3323.HK) Consensus earnings revisions for PetroChina (857.HK)

0.50

0.70

0.90

1.10

1.30

1.50

1.70

1.90


FY15 FY16(HK$)

0.10

0.30

0.50

0.70

0.90

1.10

Jan/14Apr/14 Jul/14 Oct/14Jan/15Apr/15 Jul/15 Oct/15

FY15 FY16(HK$)

Consensus revisions for China Shenhua (1088.HK) Consensus revisions for China Oilfield Services (2883.HK)

1.00

1.20

1.40

1.60

1.80

2.00

2.20

2.40

2.60

2.80

3.00


FY15 FY16(HK$)

0.20

0.70

1.20

1.70

2.20

2.70


FY15 FY16(HK$)

Consensus earnings revisions for CNOOC (883.HK) Consensus revisions for Sinopec (386.HK)

0.40

0.60

0.80

1.00

1.20

1.40

1.60

1.80

2.00

2.20


FY15 FY16(HK$)

0.30

0.40

0.50

0.60

0.70

0.80

0.90

1.00

1.10


FY15 FY16(HK$)


Market Focus

Monthly market wrap

Page 13

Consensus revisions for Tsingtao Brewery (168.HK) Consensus revisions for China Unicom (762.HK)

1.50

1.70

1.90

2.10

2.30

2.50

2.70

2.90


FY15 FY16(HK$)

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30


FY15 FY16(HK$)

Consensus earnings revisions for Tingyi (322.HK) Consensus earnings revisions for Anhui Conch (914.HK)

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2


FY15 FY16(HK$)

1.50

2.00

2.50

3.00

3.50

4.00


FY15 FY16(HK$)

Consensus revisions for Jiangxi Copper (358.HK) Consensus earnings revisions for HKEx (388.HK)

0.50

0.60

0.70

0.80

0.90

1.00

1.10

1.20

1.30


FY15 FY16(HK$)

5.00

5.50

6.00

6.50

7.00

7.50

8.00

8.50

9.00

9.50


FY15 FY16(HK$)


Market Focus

Monthly market wrap

Page 14

Consensus revisions for Ping An (2318.HK) Consensus revisions for Greatwall Motor (2333.HK)

2.00

2.50

3.00

3.50

4.00

4.50


FY15 FY16(HK$)

-

0.50

1.00

1.50

2.00

2.50


FY15 FY16(HK$)

Consensus revisions for BOC (3988.HK) Consensus revisions for China Longyuan (916.HK)

0.50

0.55

0.60

0.65

0.70

0.75

0.80

0.85

0.90

0.95

1.00


FY15 FY16(HK$)

0.40

0.50

0.60

0.70

0.80

0.90

1.00


FY15 FY16(HK$)

Consensus revisions for COSCO Pacific (1199.HK) Consensus revisions for Swire (19.HK)

0.80

0.85

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30


FY15 FY16(HK$)

6.0

6.5

7.0

7.5

8.0

8.5

9.0


FY15 FY16(HK$)


Market Focus

Monthly market wrap

Page 15

1 month sector share price performance

-20%

-15%

-10%

-5%

0%

5%

10%

15%

20%

Pow

er -

Ch

ina

Tran

spo

rt (a

irlin

es)

Co

nsu

mer

(per

son

al)

Ban

ks -

Glo

bal

Rai

l & c

on

stru

ctio

nG

as Oil

Gam

ing

Alt

ern

ativ

e en

erg

yC

on

sum

er (l

uxu

ries)

Ban

ks -

Ch

ina

Co

ng

lom

erat

es -

HK

Pow

er, i

nfr

a &

uti

litie

sTe

leco

m -

HK

HSC

EIFo

od

an

d b

ever

ages

Tran

spo

rt (s

hip

pin

g)

Stee

l & a

lum

iniu

mTe

leco

m -

Ch

ina

Pro

per

ties

-H

KIn

sura

nce HSI

Co

nsu

mer

(ap

par

el)

Cem

ent

Indu

stri

alA

uto

s an

d p

arts

Ban

ks -

HK

Co

nsu

mer

(ret

aile

rs)

REI

TTr

ansp

ort

(to

ll ro

ads)

Pro

per

ties

-Ch

ina

Har

dw

are

& e

qu

ipC

on

sum

er (h

ou

seh

old

)W

ater

, en

viro

nm

enta

lPh

arm

aceu

tica

lsTr

ansp

ort

(po

rts)

Bro

kers

-Ch

ina

Co

nsu

mer

(sp

ort

swea

r)C

oal

Soft

war

e &

IT

serv

ices

Source: Thomson Reuters, DBS Vickers

YTD sector share price performance

-60%

-40%

-20%

0%

20%

40%

60%

80%

Gam

ing

Stee

l & a

lum

iniu

mC

oal

Pow

er -

Ch

ina

Bro

kers

-Ch

ina

Co

nsu

mer

(lu

xurie

s)B

anks

-G

lob

al Oil

HSC

EIB

anks

-C

hin

aC

on

sum

er (r

etai

lers

)Fo

od

an

d b

ever

ages

Gas

Co

ng

lom

erat

es -

HK

Har

dw

are

& e

qu

ipTr

ansp

ort

(sh

ipp

ing

)Te

leco

m -

Ch

ina

Co

nsu

mer

(ap

par

el)

Co

nsu

mer

(per

son

al)

Tele

com

-H

KH

SIPr

op

erti

es -

HK

Alt

ern

ativ

e en

erg

yIn

du

stri

alIn

sura

nce

Au

tos

and

par

tsC

on

sum

er (h

ou

seh

old

)Tr

ansp

ort

(po

rts)

Phar

mac

euti

cals

Pow

er, i

nfr

a &

uti

litie

sR

ail &

co

nst

ruct

ion

Ban

ks -

HK

REI

TPr

op

erti

es -

Ch

ina

Tran

spo

rt (t

oll

road

s)Tr

ansp

ort

(air

lines

)W

ater

, en

viro

nm

enta

lC

emen

tC

on

sum

er (s

po

rtsw

ear)

Soft

war

e &

IT

serv

ices

Source: Thomson Reuters, DBS Vickers

Market Focus

Monthly market wrap

Page 16

Moving average and RSI for HSI

Moving average and RSI for HSCEI

20,000

21,000

22,000

23,000

24,000

25,000

26,000

27,000

28,000

29,000

30,000

Jan/14Apr/14 Jul/14 Oct/14Jan/15Apr/15 Jul/15 Oct/15

HSI 50d avg 100d avg 250d avg

20

50

80

14d RSI

9,000

10,000

11,000

12,000

13,000

14,000

15,000

Jan/14Apr/14Jul/14 Oct/14Jan/15Apr/15Jul/15 Oct/15

HSCEI 50d avg 100d avg 250d avg

20

50

80

14d RSI

Moving average and RSI for CSI 300

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

Jan/14Apr/14Jul/14Oct/14Jan/15Apr/15Jul/15Oct/15

CSI 50d avg 100d avg 250d avg

20

50

80

14d RSI


Market Focus

Monthly market wrap

Page 17

Three favoured investment themes

Can benefit from Can benefitexpected fis ca l initia tives from monetary pol ic ies or

currency trends

China railway and construction ZTE 763 China property (net +ve)Environmental companies COSCO 1199 China railway and constructionOther infra and FAI plays China infrastructure Environmental companies

IT and automation solutions and FAI plays HK banks (net +ve for non-CNH)Environmental

SOE reform: COFCO, Sinopharm, CNBM 3323 Exporters: Techtronic 669, Vtech 303, CNBM, Unicom, COSCO Pac Textile 1382, Shenzhou 2313,

Sinopec Samson 531

Offshore revenues:Lenovo 992, Minth 425

GD Inv 270

Sinopec 386 China propertyKangda Int. 6136 TK Group 2283

China banksChina autos and parts

Airlines, global banks, oilChinese brokers, gaming

Screen - growth improvement with cheap valuations:CTCM 570, Kangda 6136, Luen Thai 311China Modern Dairy 1117, Jiangnan 1366

Laggards and va lue picks

Source: DBS Vickers

Market Focus

Monthly market wrap

Page 18

2016F ROE vs. 2015F P/B

China banks

Insurance

China property

Environmental

Railway and construction

Apparel and footwear

China auto and parts

China IPPsChina materials

China telecom carriersChina telecom

equipment

HK banks

Hong Kong property

Hong Kong telecom

Pharmaceutical & healthcare

Textiles

China coal

China F&B

Oil

Retailers

Chinese brokers

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0

(2016F ROE)

(201

5P/

B)

(2016F ROE)

(201

5P/

B)

(2016F ROE)

(201

5P/

B)

(2016F ROE)

(201

5P/

B)

Source: DBS Vickers

Market Focus

Monthly market wrap

Page 19

DBSV HK top ten BUYs

EPS

Closing DBSV Tgt CA GRT ick er price rat ing Price F Y15F F Y16F 14-16 F Y15F F Y16F F Y15F F Y16F F Y15F F Y16F

Top pick s (HK$) (HK$) (X ) (X ) (%) (%) (%) (X ) (X ) (%) (%)Belle 1880.HK 6.78 BUY 9.55 9.9 9.5 5.7 18.9 19.0 1.9 1.7 10.6 6.3

CMB 3968.HK 18.22 BUY 26.82 5.8 5.2 12.8 18.3 17.5 1.0 0.8 5.2 5.8

CR Land 1109.HK 20.85 BUY 24.98 11.4 9.9 (8.6) 11.0 10.9 1.1 1.0 2.4 2.7

CH Rail. Constr. 1186.HK 10.30 BUY 13.55 8.7 8.3 5.0 12.1 11.3 0.9 0.9 1.7 1.8

GZ Auto 2238.HK 7.42 BUY 8.30 10.9 9.6 13.6 9.8 10.4 1.0 1.0 2.8 3.1

Haitong Sec* 6837.HK 13.38 NR n.a. 8.5 9.0 24.1 16.5 13.9 1.2 1.1 3.4 3.2

PetroChina* 857.HK 5.51 NR n.a. 17.0 14.1 (26.1) 4.0 4.7 0.7 0.7 2.6 3.1Sinopharm 1099.HK 32.55 BUY 34.00 20.2 17.4 16.3 12.8 13.4 2.5 2.2 1.3 1.5

Tencent 700.HK 154.30 BUY 184.00 35.3 27.4 32.1 31.8 31.4 11.2 8.5 0.3 0.5

Value Partners 806.HK 9.15 BUY 12.20 27.0 11.8 30.6 16.0 31.6 4.2 3.4 2.6 4.9

Simple av erage 15.5 12.2 10.5 15.1 16.4 2.6 2.1 3.3 3.3

Div y ieldPBVPER ROE

Source: DBS Vickers

DBSV top picks – simple average

DBSV top picks – market cap weighted

90

100

110

120

130

140

150

160


DBSV top picks HSI

(28 Feb 2014 = 100)

90

100

110

120

130

140

150

160

170

180


DBSV top picks - market cap weighted HSI

(28 Feb 2014 = 100)


Our top ten list:

Belle (1880.HK)

- 1HFY16 results were upbeat; growing contribution from sportswear can offset structural decline of footwear business

- Net cash position of HK$0.88 per share and strong free cash flow can support high dividend yields; 60% dividend payout has upside potential

- Cheap alternative exposure to the fast growing sportswear sector

China Merchants Bank (3968.HK)

- 3Q PPOP growth was outstanding at 37% y-o-y, thanks in part to sector-high NIM

- Provision and capital positions also improved to near SOE bank levels. CET 1 CAR of 10.8% is stronger than most joint stock bank peers

- CMB has a PB premium over peers, but we believe this can widen due to CMB’s better ROE while also having better capital adequacy

Market Focus

Monthly market wrap

Page 20

CR Land (1109.HK)

- 2015 presales should beat 2015 target thanks to strong 9M15 sales; 2015 presales to grow 29% from 2014.

- Beneficiary of PBOC rate cuts as cuts stimulate demand and lowers funding costs.

- Current PE valuation is undemanding, and is midway between trough PE of 7.1x and historcial average of 12.1x.

China Railway Construction (1186.HK)

- Chinese policy makers are helping infrastructure funding by lowering borrowing costs and project capital requirements, and this will help domestic demand

- Company can win overseas contracts as part of China’s “one belt one road” strategy

- Decline in borrowing costs to help high gearing companies like CRCC

GAC Group (2238.HK)

- Has lagged the market on slowing sales concerns; current valuation is attractive against new growth profile (PEG of 0.35)

- New models and seasonality should help 4Q sales

- Parent company Guangzhou Automobile Industry Group has been buying H-shares.

Haitong Securities (6837.HK)

- A-shares have returned to more reasonable valuations

- Trading activity should pick up from lower interest rates, and possible MSCI inclusion in 2016

- Haitong Sec should be more resilient than smaller brokers against gradual entrance of Chinese banks into the retail brokerage space

PetroChina (857.HK)

- Boom in US shale oil production to be less of a factor in 2016

- More pro-growth policies from China will increase confidence in global economic growth

- Year on year crude oil price trends to be much better in 2016 compared to 2015’s sharp decline from 2014

Sinopharm (1099.HK)

- Healthcare is highlighted as a focus area in China's government work report; parent company is also pilot for SOE reform

- Aging population and rising wealth underpin the industry's demand growth

- Large drug distributors like Sinopharm has been gaining market share with its reliability in supply and ability to extend credit

Tencent (700.HK)

- New advertising offerings help drive revenue growth; Tencent only has 5% market share in online ads

- We foresee Tencent can better monetize its >800m users through new ad offerings and new apps

- We project Tencent can grow its revenues by 50% CAGR during FY14-16

Value Partners (806.HK)

- We do not foresee large downside risk to AUM given market valuations and past redemption patterns, while P/AUM is already at trough levels

- The fund house is still in a performance fee cycle, because watermark levels are attainable

- Company will also benefit from trend of mainland wealth diversifying to offshore assets and asset managers

Market Focus

Monthly market wrap

Page 21

Sector vs. market valuations

China banks PB / HSI PB

China property PB / HSI PB

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

2010 2011 2012 2013 2014 2015 2016

China banks / HSI 2yr mean

+2 stdev -2 stdev

x

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

08 09 10 11 12 13 14 15

China Property / HSI 2yr mean PB

-2 stdev +2 stdevx

China brokers PE / HSI PE

China insurance PE / HSI PE

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

Jan-12 Jan-13 Jan-14 Jan-15

China Brokers / HSI 2yr mean PE

-2 stdev +2 stdev

x

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Insurance / HSI 2yr mean PE

-2 stdev +2 stdev

x

China steel PB / HSI PB

China cement PE / HSI PE

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0


Steel / HSI 2yr mean PB

-2 stdev +2 stdev

x

0.3

0.5

0.7

0.9

1.1

1.3

1.5

1.7

1.9


Cement / HSI 2yr mean-2 stdev +2 stdev

x


Market Focus

Monthly market wrap

Page 22

Tencent PE / HSI PE

Gaming PE / HSI PE

1.5

2.0

2.5

3.0

3.5

4.0

Jan-11 Jan-12 Jan-13 Jan-14 Jan-15

Tencent / HSI 2yr mean PE

-2 stdev +2 stdev

x

0.5

1.0

1.5

2.0

2.5

3.0

3.5


Gaming 2yr mean PE

-2 stdev +2 stdev

x

Water and environmental PE / HSI PE

Retail PE / HSI PE

0.0

0.5

1.0

1.5

2.0

2.5

08 09 10 11 12 13 14 15

Water / HSI 2yr mean PE-2 stdev +2 stdev

x

0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6

08 09 10 11 12 13 14 15

Retail / HSI 2yr mean PE

-2 stdev +2 stdev

x

China autos PE / HSI PE

Apparel and footwear PE / HSI PE

0.0

0.5

1.0

1.5

2.0

2.5

3.0

08 09 10 11 12 13 14 15

Auto / HSI 2yr mean-2 stdev +2 stdev

x

0.5 0.7 0.9 1.1 1.3 1.5 1.7 1.9 2.1


Apparel / HSI 2yr mean-2 stdev +2 stdev

x


Market Focus

Monthly market wrap

Page 23

HK property PB / HSI PB

HK banks PB / HSI PB

0.40

0.45

0.50

0.55

0.60

0.65

0.70

0.75

0.80

08 09 10 11 12 13 14 15

HK Property / HSI 2yr mean PB

-2 stdev +2 stdev

x

0.90

0.95

1.00

1.05

1.10

1.15

1.20

1.25

1.30

1.35

1.40

06 07 08 09 10 11 12 13 14 15

HK banks / HSI 2yr mean

+2 stdev -2 stdev

x

China telecom PE / HSI PE

China oil and gas PE / HSI PE

1.0

1.2

1.4

1.6

1.8

2.0

2.2


China telecom / HSI 2yr mean-2 stdev +2 stdev

x

0.6

0.8

1.0

1.2

1.4

1.6

1.8

2.0


Oil & Gas / HSI 2yr mean PE-2 stdev +2 stdev

x


Market Focus

Monthly market wrap

Page 24

Hang Seng Index and select news

20,000

22,000

24,000

26,000

28,000

30,000

Jul/14 Oct/14 Jan/15 Apr/15 Jul/15 Oct/15

11

1 2

3

45-7

9

810

20

1921

24

23

22

25,26

27,28

29,30

31 34

36

35

32,33

14

12-13

37

15-18

38

3940

41-43

44

45

46

47,48

49, 50

5651

52-55

57 58

59

60,61

63-6569

68

67

6670, 71

62

72, 73

74-77

78‐83

# Date

1 7/1/20142 7/10/20143 7/16/20144 7/24/20145 8/6/20146 8/8/20147 8/13/20148 8/21/20149 9/2/2014

10 9/4/201411 9/12/201412 9/22/201413 9/26/201414 9/30/201415 10/10/201416 10/14/201417 10/20/201418 10/21/201419 10/30/201420 10/31/201421 11/10/201422 11/21/201423 12/4/201424 12/11/201425 12/16/201426 12/17/201427 1/5/201528 1/6/201529 1/15/201530 1/16/2015

HK university students begin week-long boycott of classes for SuffragePolice fires tear gas at demonstrators on the 28th, a Sunday night

Large Chinese brokers penalized for breaching margin financing rules

CBRC sought feedback on draft rules for WMPs; allows indirect equity investments

Bank of Japan expands liquidity pumping

Russian Ruble crashes on Black Tuesday

Premier Li Keqiang said Shenzhen-HK stock connect should be nextHKEX said it would allow short selling for northbound SH-HK trades in near futureSwiss Franc abandons Euro cap

News or datapoint

Irregularities found in accounts of Portugal's biggest listed bank

Agile confirms chairman is under house custody

China 3Q GDP slowed to 7.3% but beat forecasts of 7.2%; Gov-student talks in HK

HKEX announced SH-HK stock connect will begin on 17 November

Russia imposed sanctions on Western food importsHSBC Flash PMI surprised by rising to 52China's 2Q GDP growth was slightly above estimates at 7.5%

1st batch of Chinese brokers receive approval for Southbound stock connect

Occupy Central downsizing; Big 4 banks Aug loan rebound; Ukraine ceasefireHSBC flash PMI disappointed at 50.3 vs. 51.7 in prior month and forecast of 51.5

China loosens mortgage policies by expanding pool of eligible buyers

Disappointing TSF and industrial production data

July TSF and new loan were way below estimates

Police oversee clearing of main Occupy protest site in Admiralty

PBOC said planning to inject Rmb200bn into joint stock banks

July China export was much better than forecast; US bombs Iraq targets

ECB announced fresh measures including rate cuts and buying ABS

HKMA began to defend HK$ peg with injections to meet demand

PBOC announced benchmark interest rate cuts

US 3Q GDP beat forecasts and grew 3.5%

China Securities Journal reported China may ease LDR ratio requirement


( )

Market Focus

Monthly market wrap

Page 25

# Date31 1/22/201532 1/30/201533 2/4/201534 2/27/201535 3/13/201536 3/18/201537 3/27/201538 4/17/201539 4/20/201540 5/8/201541 5/25/201542 5/26/201543 5/28/201544 6/9/201545 6/24/201546 6/26/201547 7/1/201548 7/3/201549 7/6/201550 7/7/201551 7/9/201552 7/10/201553 7/13/201554 7/14/201555 7/15/201556 7/27/201557 8/4/201558 8/11/201559 8/12/201560 8/24/201561 8/25/201562 8/31/201563 9/2/201564 9/3/201565 9/4/201566 9/7/201567 9/17/201568 9/23/201569 9/29/201570 9/30/201571 10/1/201572 10/19/201573 10/23/201574 10/28/201575 10/29/201576 11/6/201577 11/12/201578 11/13/201579 11/19/201580 11/20/201581 11/24/201582 11/26/201583 11/27/2015 CSRC bans derivatives funding for stock trades

CSRC eases net stock purchase requirement for brokersCSRC announced investigations in China's largest brokerage firms

Better than expected US non-farm payrolls boosted Dec Fed rate hike expectationsChina new loans and TSF figures disappointOver the weekend, CBRC announced A-share IPOs will resumePBOC to cut overnight and 7-day SLF rates to 2.75% and 3.25%CSRC restarts IPOs for 10 approved companies

Brokers temporarily suspended lending stocks to clients for short selling

MSCI review did not include A-shares in emerging market index

China's 6.9% 3Q GDP slightly beat estimate of 6.8%PBOC announced benchmark rate and RRR cuts after markets closed

PBOC Cuts Mortgage Down payment Requirement to 25% from 30%Purchase tax on small cars (<1.6L capacity) will be halved to 5% until end of 2016

Regulators announced they will lift 75% loan to deposit ratio cap25bps symmetrical interest rate cut; conditional RRR cut for qualified lendersCSRC announced a 30% transaction fee cut; flexibility given to margin callsCSRC said it will reduce IPOs; China Securities Finance capital boost from 24 to 100bnNSF reportedly asked outsourced fund managers to not sell equities

Cut RRR by 100bps on Sunday, releasing an estimated Rmb1.4trn in reservesPBOC cut 1 year benchmark lending rate by 25bpsMutual fund recognition announcement over the weekendFTSE adds A-share to its EM indexHuijin trimmed stakes in ICBC, CCB

China policy makers caution on stock market frenzy; 7 measures to cool sentiment

China cut benchmark rates by 25bps50bps RRR cut and an additional 50bps cut for qualified lendersMinsheng Bank's president resigns after corruption investigation reports

CSRC allows China mutual funds to invest in HK stocks through SH-HK stock connect

Draghi announced EUR 1trn QE for the Eurozone from Mar'15 to Sept'16

China's NPC ends with focus on quality growth in China's new normalFed minutes indicate a still patient approach to rate hikes

Brokers allocate additional investments into CSFC account to support stocks

Largest Rmb devaluation since US$ peg removal, Rmb reference rate down 1.9%

News or datapoint

Fed keeps interest rate unchanged5th plenum outlines new growth initiatives; one child policy canceled

CSRC Probes Violations in Margin Trading Via Non-Brokers Caixin PMI dropped to 47.8 in July

PBOC cuts interest rate by 25bps and RRR by 50bps

Janet Yellen Expects Interest Rate Increase This Year

National People's Congress voted to remove China's loan-to-deposit cap

China to introduce circuit-breaker for stock market China to cut dividend taxes for long-term shareholders

China will allow pension funds to invest up to 30% of assets in equities

China Caixin-Markit PMI 47.0, a 6.5 year low

China Ramps Up Policy Response as Panic Grips Stock Market, CSF increase buying ofSASAC forbids SOE's to sell public shares, will monitor SOE equity holdings daily366 companies (40% of listed companies) apply to resume trading of their A-sharesChina clamps down on off-market leveraged stock trading

Federal Reserve keeps policy interest rate unchanged

CSF subscribes Rmb80bn to mutual funds

CFFEX steps up measures to tackle speculation in stock index future trading

PBOC intervened to prop up Rmb


Market Focus

Monthly market wrap

Page 26

CSI300 Index and select news

2,000

2,500

3,000

3,500

4,000

4,500

5,000

5,500

6,000

Jul/14 Oct/14 Jan/15 Apr/15 Jul/15 Oct/15

11

1,23,4

5

6

7-10

12

1314

15

16,17 18 20

22

21

19

23

24 25

26

27,28 29

30

31

33-36

32

44

52

46-50

53-6566-70

51

38-4345

3780

71-79

# Date

1 7/16/20142 7/24/20143 8/13/20144 8/21/20145 9/12/20146 9/30/20147 10/14/20148 10/20/20149 10/21/2014

10 10/23/201411 11/10/201412 11/21/201413 12/4/201414 12/12/201415 12/17/201416 1/5/201517 1/6/201518 1/16/201519 2/4/201520 2/27/201521 3/13/201522 3/27/201523 4/17/201524 4/20/201525 5/8/201526 5/22/201527 5/26/201528 5/27/201529 6/9/201530 6/24/201531 6/26/201532 7/1/201533 7/2/201534 7/3/2015

Huijin trimmed stakes in ICBC, CCBMSCI review did not include A-shares in emerging market indexRegulators announced they will lift 75% loan to deposit ratio cap25bps symmetrical interest rate cut; conditional RRR cut for qualified lendersCSRC announced a 30% transaction fee cut; flexibility given to margin callCSRC announce probe to investigate and punish market manipulationCSRC said it will reduce IPOs; China Securities Finance capital boost from 24 to 100bn

CSRC allows China mutual funds to invest in HK stocks through SH-HK stock connectChina policy makers caution on stock market frenzy; 7 measures to cool sentimentCut RRR by 100bps on Sunday, releasing an estimated Rmb1.4trn in reservesPBOC cut 1 year benchmark lending rate by 25bpsMutual fund recognition announcement over the weekendFTSE adds A-share to its EM index

Premier Li Keqiang said Shenzhen-HK stock connect should be nextHKEX said it would allow short selling for northbound SH-HK trades in near futureLarge Chinese brokers penalized for breaching margin financing rules50bps RRR cut and an additional 50bps cut for qualified lendersChina cut benchmark rates by 25bpsChina's NPC ends with focus on quality growth in China's new normal

HKEX announced SH-HK stock connect will begin on 17 NovemberPBOC announced benchmark interest rate cutsCBRC sought feedback on draft rules for WMPs; allows indirect equity investmentsNov Rmb loans topped expectations at Rmb853bn vs. forecasts of Rmb655bnChina Securities Journal reported China may ease LDR ratio requirement

China loosens mortgage policies by expanding pool of eligible buyers1st batch of Chinese brokers receive approval for Southbound stock connectPBOC said planning to inject Rmb200bn into joint stock banksChina 3Q GDP slowed to 7.3% but beat forecasts of 7.2%; Gov-student talks in HKHSBC CH manufacturing flash PMI improved to 50.4 and beat forecasts

July TSF and new loan were way below estimates

Disappointing TSF and industrial production dataHSBC flash PMI disappointed at 50.3 vs. 51.7 in prior month and forecast of 51.5

News or datapointChina's 2Q GDP growth was slightly above estimates at 7.5%HSBC Flash PMI surprised by rising to 52


Market Focus

Monthly market wrap

Page 27

# Date35 7/6/201536 7/7/201537 7/8/201538 7/9/201539 7/10/201540 7/13/201541 7/14/201542 7/15/201543 7/17/201544 7/27/201545 8/3/201546 8/4/201547 8/10/201548 8/11/201549 8/12/201550 8/14/201551 8/24/201552 8/25/201553 8/28/201554 8/31/201555 9/1/201556 9/2/201557 9/3/201558 9/4/201559 9/7/201560 9/14/201561 9/17/201562 9/23/201563 9/29/201564 9/30/201565 10/1/201566 10/12/201567 10/19/201568 10/23/201569 10/28/201570 10/29/201571 11/6/201572 11/9/201573 11/12/201574 11/13/201576 11/19/201577 11/20/201578 11/24/201579 11/26/201580 11/27/2015

China lowered down payment requirement for 2nd homes Brokers allocate additional investments into CSFC account to support stocks

Federal Reserve keeps policy interest rate unchanged China Caixin-Markit PMI 47.0, a 6.5 year low

CSRC restarts IPOs for 10 approved companiesCSRC eases net stock purchase requirement for brokers

PBOC cuts interest rate by 25bps and RRR by 50bpsCSRC required 50 brokerage firms to provide rescue funds to CSFC

CSRC announce stabilization measures: regulate margin financing, info system, algo

National People's Congress voted to remove China's loan-to-deposit cap

Largest Rmb devaluation since US$ peg removal, Rmb reference rate down 1.9%

CSFC transferred shares to Huijin investment for long term holdings

CSFC said to have up to Rmb2tn on tap; SSE loosens margin rulesCSRC Probes Violations in Margin Trading Via Non-BrokersCSRC says IPO freeze necessary but market rescue operations to be short term

PBOC intervened to prop up Rmb

Some algorithmic trading accounts suspended by SSE

China will allow pension funds to invest up to 30% of assets in equities

CSFC invests Rmb200bn in 5 funds; CSRC orders listco shareholders to increase stakes China Ramps Up Policy Response as Panic Grips Stock Market, CSF increase buying ofSASAC forbids SOE's to sell public shares, will monitor SOE equity holdings daily366 companies (40% of listed companies) apply to resume trading of their A-sharesChina clamps down on off-market leveraged stock tradingCSFC invests another Rmb80bn in mutual funds

News or datapointNSF reportedly asked outsourced fund managers to not sell equitiesBrokerages announce proprietary investments in China blue chip ETFs

China unveils details of SOE reform

CFFEX steps up measures to tackle speculation in stock index future trading China to introduce circuit-breaker for stock market China to cut dividend taxes for long-term shareholders

Janet Yellen Expects Interest Rate Increase This Year PBOC Cuts Mortgage Down payment Requirement to 25% from 30%Purchase tax on small cars (<1.6L capacity) will be halved to 5% until end of 2016

CSRC bans derivatives funding for stock trades

China new loans and TSF figures disappointOver the weekend, CBRC announced A-share IPOs will resume

China's 6.9% 3Q GDP slightly beat estimate of 6.8%PBOC expands relending trial to 9 more cities and provinces

CSRC says IPO to resume by year-end

5th plenum outlines new growth initiatives; one child policy canceled

PBOC to cut overnight and 7-day SLF rates to 2.75% and 3.25%

Better than expected US non-farm payrolls boosted Dec Fed rate hike expectations

PBOC announced benchmark rate and RRR cuts after markets closedFed keeps interest rate unchanged

CSRC announced investigations in China's largest brokerage firms


Market Focus

Monthly market wrap

Page 28

DBSV universe comparison table

St ockcode St ock name

M k tCap

(US$m)

SharePric e

(HK $)

T argetPric e

(HK $)upside

(% ) RemdPE (x )

15FPE (x )

16FPB (x )

15FY ld (% )

15FRO E (% )

15FA ut o manuf ac t urers & dealers

1114 Brilliance China 6,393 9.86 12.60 28 B 9.7 7.6 1.9 1.4 22.01728 China ZhengTong 904 3.17 4.30 36 B 7.2 5.8 0.6 2.8 9.31828 Dah Chong Hong 922 3.90 3.70 -5 B 10.2 8.8 0.7 2.9 7.3

489 Dongfeng Motor Group 11,716 10.54 13.50 28 B 5.8 5.4 0.9 2.3 16.4175 Geely Automobile 4,622 4.07 3.30 -19 H 11.7 10.5 1.5 1.3 13.7

2333 Great Wall Motor 11,199 9.51 11.50 21 B 7.1 6.4 1.7 5.0 27.0601633 Great Wall Motor-A @@@ 14,460 12.28 12.00 -2 H 11.1 10.0 2.7 3.8 27.0

2238 Guangzhou Automobile 6,160 7.42 8.30 12 B 10.9 9.6 1.0 2.8 9.8601238 Guangzhou Automobile-A @@ 17,169 20.68 10.50 -49 FV 36.9 32.4 3.5 0.8 9.8

425 Minth Group 2,222 15.56 15.00 -4 B 11.2 9.6 1.5 3.6 14.51316 Nexteer Automotiv e Group 2,755 8.55 9.60 12 B 13.1 10.7 3.2 1.5 27.21148 Xinchen China Power Hldgs 290 1.75 3.30 89 B 6.0 4.6 0.7 0.0 11.8

881 ZhongSheng 1,030 3.72 4.50 21 B 9.0 7.2 0.6 2.2 6.4Bank ing and F inance (Ch ina- A ) @ @ @

601288 Agricultural Bank of China-A 143,892 3.13 4.04 29 H 5.7 5.6 0.9 5.9 16.7601988 Bank of China-A 181,795 3.95 5.11 29 H 6.7 6.5 1.0 5.9 15.0601328 Bank of Comm-A 72,215 6.22 8.16 31 B 7.0 6.8 0.9 3.7 13.4601998 China CITIC Bank-A 51,568 7.05 7.26 3 S 8.1 7.6 1.1 3.3 14.6601939 China Construction Bank-A 222,400 5.69 7.39 30 H 6.2 6.1 1.0 4.1 17.3600036 China Merchants Bank-A 67,186 17.04 23.42 37 B 6.9 6.2 1.2 4.4 18.3600016 China Minsheng Bank-A 48,256 8.46 10.64 26 FV 6.1 5.7 1.0 2.5 17.9601398 ICBC-A 255,196 4.58 6.37 39 B 5.8 5.6 1.0 5.8 17.4

Bank ing and F inance (Ch ina)1288 Agricultural Bank of China 124,453 2.97 4.63 56 H 4.3 4.1 0.7 7.8 16.73988 Bank of China 130,653 3.44 5.86 70 B 4.6 4.4 0.7 7.0 15.03328 Bank of Communications 51,738 5.40 9.34 73 B 4.8 4.6 0.6 6.5 13.4

998 China CITIC Bank 29,517 4.89 8.31 70 B 4.4 4.1 0.6 6.8 14.6939 China Construction Bank 171,921 5.33 8.47 59 B 4.6 4.4 0.8 7.1 17.3605 China F inancial Serv ices 259 0.52 0.92 77 B 5.3 4.7 0.6 4.7 12.5

3968 China Merchants Bank 59,283 18.22 26.82 47 B 5.8 5.2 1.0 5.2 18.31988 China Minsheng Bank 34,974 7.43 12.19 64 H 4.3 3.9 0.7 3.5 17.93618 Chongqing Rural Bank 5,483 4.57 7.50 64 B 4.4 4.2 0.7 6.1 17.11398 ICBC 215,655 4.69 7.30 56 B 4.7 4.5 0.8 7.1 17.4

Bank ing and F inance (HK )2388 Bank of China HK 32,396 23.75 26.40 11 B 9.4 8.3 1.3 4.2 14.6

23 Bank of East Asia 9,438 27.70 33.50 21 H 9.5 9.4 0.9 4.4 9.6165 China Everbright Ltd 3,883 17.86 23.84 33 B 6.9 4.3 0.9 5.8 12.6

2356 Dah Sing Banking Group 2,735 15.12 14.90 -1 B 10.0 9.6 1.0 2.5 10.43360 Far East Horizon 3,430 6.73 7.24 8 B 7.8 7.4 1.0 2.6 13.6

11 Hang Seng Bank (1) 34,655 140.50 143.80 2 B 13.4 16.3 2.1 4.2 16.65 HSBC Holdings 156,132 61.80 93.70 52 B 8.5 8.7 0.8 6.8 9.4

Cement 914 Anhui Conch Cement 14,460 21.15 28.96 37 B 9.7 8.6 1.2 3.2 13.5

600585 Anhui Conch Cement-A @@@ 11,144 16.30 23.20 42 B 9.1 8.1 1.1 4.2 13.53323 China Nat'l Bldg Mat 2,898 4.16 4.45 7 FV 4.9 5.0 0.4 3.1 8.01313 China Resources Cement 2,132 2.53 3.30 30 H 9.4 9.2 0.6 2.2 6.0

Chemicals2283 T K Group 229 2.15 3.30 53 B 9.7 8.1 2.7 4.1 30.9

Source: DBS Vickers

@@@ denominated in RMB

Market Focus

Monthly market wrap

Page 29

DBSV universe comparison table (con’t)

St oc kc ode St oc k name

M k tCap

(US$m)

SharePric e

(HK $)

T argetPric e

(HK $)upside

(% ) RemdPE (x )

15FPE (x )

16FPB (x )

15FY ld (% )

15FRO E (% )

15FCong lomerat es- HK

4 Wharf Holdings # 17,402 44.50 53.00 19 B 11.9 10.8 0.5 4.3 3.620 Wheelock # 8,782 33.50 40.50 21 B 6.8 6.5 0.7 3.5 5.1

F ood and Bev erages600597 Bright Dairy & F ood@@@ 2,890 15.02 14.50 -3 H 48.6 36.2 4.7 1.2 9.0

506 China F oods 1,306 3.62 3.75 4 H 39.5 33.3 1.6 0.0 4.32319 China Mengniu 6,348 12.54 16.00 28 B 16.5 14.9 1.7 1.4 11.11117 China Modern Dairy 1,471 2.15 3.10 44 B 10.0 8.3 0.6 0.0 7.9

322 Tingy i Holding 8,110 11.22 12.60 12 H 22.2 19.3 2.5 2.2 11.7168 Tsingtao Brewery 6,057 34.75 30.80 -11 F V 24.7 24.8 2.4 1.2 9.8

600600 Tsingtao Brewery -A @@@ 5,513 31.63 25.50 -19 F V 27.5 27.5 2.6 1.1 9.8220 Uni-President China 3,566 6.40 7.25 13 H 25.4 21.9 1.9 1.2 7.9345 V itasoy 1,860 13.82 14.10 2 H 38.5 29.3 7.5 1.8 20.3151 Want Want China 10,156 6.09 6.60 8 H 17.2 15.8 4.6 1.4 28.0

Hardw are & Equ ipment552 China Comm Serv ices 2,672 2.99 4.50 51 B 7.6 6.8 0.7 3.9 9.4

2342 Comba 383 1.46 1.90 30 H 8.7 7.5 0.7 2.9 8.2600498 F iberHome Telecom 3,612 26.74 20.00 -25 F V 39.7 32.9 3.7 1.0 9.8

2618 TCL Communication 936 5.74 5.30 -8 H 6.3 6.5 1.5 5.5 25.51300 Trigiant Group 331 1.64 2.30 40 B 6.5 5.7 0.8 8.6 14.6

856 V ST Holdings 434 2.31 3.00 30 B 5.8 5.3 0.8 5.1 13.8303 V Tech 2,816 86.90 110.00 27 B 11.9 11.2 4.6 8.3 39.7763 ZTE 9,271 17.42 24.00 38 B 16.8 14.8 2.1 1.5 13.1

000063 ZTE -A @@@ 9,303 17.48 24.00 37 H 21.0 18.5 2.6 1.2 13.1Househo ld /Personal (Ch ina/HK )

1880 Belle Int'l 7,378 6.78 9.55 41 B 9.9 9.5 1.9 10.6 18.92111 Best Pacific Int'l Hldgs 405 3.07 4.40 43 B 9.8 8.8 1.7 3.1 18.16388 Coach @ ^^^ 859 24.00 24.47 2 H 21.8 19.7 3.5 4.2 16.4

210 Daphne International 306 1.44 1.35 -6 H 550.5 16.9 0.5 0.1 0.11169 Haier Electronics 5,009 13.90 18.41 32 B 10.0 8.9 2.0 1.0 21.51044 Hengan 12,242 77.90 82.00 5 H 23.5 22.1 5.0 2.8 22.0

494 Li & F ung 5,798 5.34 11.30 112 B 9.4 8.2 2.2 7.4 24.52331 Li Ning 985 4.05 4.80 19 B 223.1 19.1 1.9 0.0 1.0

311 Luen Thai 149 1.12 1.80 61 B 7.4 4.5 0.4 4.1 5.2000333 Midea Group Co Ltd@@@ 14,920 27.11 38.02 40 B 9.3 7.4 2.4 4.3 28.4

1382 Pacific Textile 2,247 12.04 13.00 8 B 16.2 14.6 5.0 6.6 28.91913 Prada 8,996 27.25 33.18 22 H 17.6 19.4 2.6 3.5 15.8

600690 Qingdao Haier 9,496 9.92 11.75 18 B 12.5 11.7 2.4 2.4 20.6531 Samson Holding 385 0.98 1.24 27 B 15.6 14.5 0.8 12.2 5.1

1910 Samsonite Int'l ^^ 4,183 23.00 30.06 31 B 21.1 18.8 3.0 2.2 14.91023 Sitoy Group 469 3.63 4.05 12 H 8.8 8.4 1.7 6.3 20.11836 Stella International 1,960 19.12 20.80 9 H 14.7 12.9 2.0 4.9 13.72678 Texhong Textile Group 622 5.45 8.50 56 B 7.6 4.4 1.0 3.9 14.2

321 Texwinca 1,412 7.92 8.55 8 B 14.2 13.0 1.8 7.1 12.8

Source: DBS Vickers

# P/NAV ; '@ denominated in USD ; @@@ denominated in RMB; ^^^ Valuation based on US-listed share; ^^ Core profit and EPS

Market Focus

Monthly market wrap

Page 30



M k tCap

(US$m)

SharePric e

(HK $)

T argetPric e

(HK $)upside

(% ) RemdPE (x )

15FPE (x )

16FPB (x )

15FY ld (% )

15FRO E (% )

15FIndust rials

3777 China F iber Optic Network 227 0.82 2.90 254 B 2.7 2.3 0.4 0.0 16.2517 Cosco International 868 4.39 5.20 18 B 19.3 17.8 0.8 2.6 4.4

1366 J iangnan Group 868 1.65 2.20 33 B 6.9 5.7 1.1 3.6 17.5179 J ohnson Electric 3,192 28.10 27.20 -3 H 15.7 14.3 1.7 2.0 11.5

2314 Lee and Man Paper 2,638 4.46 5.40 21 H 8.9 7.9 1.1 3.9 12.62689 Nine Dragons 2,715 4.51 5.50 22 H 12.3 10.2 0.8 1.9 5.73393 Wasion Group 1,171 8.84 12.50 41 B 11.5 9.6 1.7 3.2 16.4

In f rast ruc t u re152 Shenzhen International 3,126 12.76 14.36 13 B 12.0 11.3 1.3 2.5 11.0

Inv est ment Serv ic es (Ch ina / HK )806 V alue Partners Group 2,182 9.15 12.20 33 B 27.0 11.8 4.2 2.6 16.0

M ed ia 752 Pico F ar East 320 2.03 2.98 47 B 8.8 7.9 1.4 6.0 16.6511 TV B 1,766 31.25 35.09 12 F V 7.6 12.1 1.5 6.3 20.2

Pharmac eut ic al & Healt h Care2877 China Shineway 1,078 10.10 9.50 -6 H 9.6 9.4 1.3 4.2 14.1

570 China Traditional Chinese Med 3,135 5.42 11.30 108 B 23.6 13.7 1.8 0.0 10.01681 Consun Pharmaceutical 618 4.79 6.80 42 B 14.5 11.6 2.4 0.8 17.6

000999 CR Sanjiu Medical & Pharm@@ 3,902 25.50 36.20 42 B 20.9 18.7 3.3 1.7 16.7853 Microport Scientific 561 3.05 1.95 -36 F V n.a. 69.0 1.7 0.0 -2.1

1498 PuraPharm Corporation 138 4.75 7.20 52 B 23.1 15.1 2.3 0.0 15.21066 Shandong Weigao 3,176 5.50 5.10 -7 H 18.3 16.2 1.9 1.6 10.81099 Sinopharm Group 11,620 32.55 34.00 4 B 20.2 17.4 2.5 1.3 12.8

600535 Tasly Pharmaceutical Group 6,064 35.90 32.00 -11 H 22.1 19.7 6.1 1.6 30.7300026 Tianjin Chase Sun Pharm@@@ 2,726 19.13 21.40 12 H 31.4 25.4 3.7 0.4 15.2

2393 Yestar International 935 3.33 4.27 28 B 31.2 20.7 5.0 1.5 23.6002603 Yiling Pharmaceutical 3,333 18.92 14.20 -25 H 47.8 39.2 4.3 0.4 9.4

Propert ies (Ch ina) (2 )3383 Agile Property # 2,097 4.15 3.66 -12 H 3.9 4.3 0.2 6.5 8.8

832 Central China # 492 1.56 1.89 21 B 4.2 3.8 0.3 7.2 11.11224 CC Land # 715 2.14 2.06 -4 H 4.9 23.6 0.8 4.1 7.4

81 China Ov erseas Grand Oceans 792 2.69 4.25 58 B 3.8 2.5 0.3 1.9 12.5688 China Ov erseas # 32,695 25.70 38.96 52 B 8.2 7.7 1.0 2.5 17.2

1109 China Resources Land # 18,644 20.85 24.98 20 B 11.4 9.9 0.8 2.4 11.02202 China V anke 27,538 19.32 23.41 21 B 10.3 8.9 0.9 3.4 18.2

000002 China V anke-A @@@ 21,480 15.07 19.31 28 B 9.8 8.4 0.8 3.6 18.22007 Country Garden # 8,480 2.91 4.86 67 B 5.5 5.1 0.7 5.9 15.43333 Evergrande Real Estate # 11,454 6.11 5.35 -12 H 11.8 8.6 0.6 2.1 5.7

fsg sp F irst Sponsor Group @@ 1 1.26 1.57 25 B 13.7 12.1 0.6 1.4 5.9817 China J inmao Holdings # 3,235 2.35 2.97 26 B 8.2 6.6 0.5 3.7 7.9813 Shimao Property # 5,797 12.94 13.50 4 B 4.9 4.6 0.5 7.0 15.2272 Shui On Land # 2,216 2.14 1.97 -8 H n.a. n.a. 0.4 0.4 -1.5

3377 Sino-Ocean Land # 4,215 4.35 6.70 54 B 7.7 6.1 0.5 4.3 8.3410 Soho China # 2,120 3.16 3.60 14 F V 49.2 29.5 0.4 1.1 0.7337 Greenland (Hong Kong) # 1,153 3.20 8.28 159 B 14.6 4.7 0.5 0.0 7.7

Yllg sp Yanlord Land # @@ 1,449 1.05 1.35 29 B 10.2 7.0 0.5 1.4 4.6123 Yuexiu Property # 2,080 1.30 1.49 15 H 7.9 6.7 0.4 5.3 5.7

Source: DBS Vickers

@@ denominated in SGD; # P/NAV; @@@ denominated in RMB

Market Focus

Monthly market wrap

Page 31


St ockc ode St oc k name

M k tCap

(US$m)

SharePric e

(HK $)

T argetPric e

(HK $)upside

(% ) RemdPE (x )

15FPE (x )

16FPB (x )

15FY ld (% )

15FRO E (% )

15FPropert ies (HK )

1113 CK Property 25,172 50.55 69.45 37 B 12.2 10.8 0.5 2.7 6.541 Great Eagle # 2,135 24.90 28.60 15 H 10.4 10.5 0.4 3.0 3.0

101 Hang Lung Properties # ^ 10,537 18.16 25.05 38 B 14.2 13.8 0.5 4.2 4.312 Henderson Land # ^ 20,371 47.75 50.75 6 H 16.6 15.6 0.6 2.4 3.9

HKL SP Hongkong Land ^ # @ 16,446 6.99 9.32 33 B 18.3 18.0 0.7 2.7 3.214 Hy san Dev elopment # 4,482 32.75 39.40 20 B 15.1 14.8 0.5 3.9 3.4

173 K. Wah Intl # 1,227 3.35 4.00 19 B 14.8 7.6 0.3 4.5 2.6683 Kerry Properties # 4,076 21.85 28.95 32 B 8.5 8.1 0.3 3.7 4.5488 Lai Sun Dev elopment # 309 0.12 0.22 82 B 8.2 9.1 0.1 2.1 9.3

66 MTR ^ # 27,194 36.00 35.95 0 H 19.2 23.8 0.9 2.9 6.517 New World Dev # 8,961 7.72 10.21 32 B 10.0 9.1 0.4 5.4 11.316 SHK Properties # ^ 35,575 95.30 136.70 43 B 13.6 10.9 0.5 3.5 4.683 Sino Land # 9,027 11.50 13.80 20 B 13.1 13.1 0.5 4.3 4.6

1972 Swire Properties # 16,982 22.50 28.20 25 B 17.2 17.4 0.6 3.0 3.688 Tai Cheung # 497 6.24 8.51 36 B 7.0 9.9 0.3 4.8 8.2

369 Wing Tai Properties # 758 4.38 5.14 17 B 14.4 18.2 0.3 3.1 1.8Railw ay & Const ruc t ion

1800 China Comm Construction 18,698 8.96 11.25 26 H 8.0 7.5 0.9 2.9 12.1601800 China Comm Construction-A @@@ 28,631 13.72 14.35 5 H 14.9 14.0 1.7 1.9 12.1

1186 China Railway Construction 18,045 10.30 13.55 32 B 8.7 8.3 0.9 1.7 12.1601186 China Railway Construction-A @@@ 24,055 13.73 15.95 16 H 14.1 13.6 1.5 1.3 12.1

390 China Railway Group 18,980 6.44 8.75 36 B 10.2 9.4 1.1 1.5 11.2601390 China Railway Group-A@@@ 32,950 11.18 12.65 13 H 21.7 20.0 2.3 0.8 11.2

1766 CRRC Corp 34,925 9.92 12.25 23 B 18.3 16.0 2.2 1.6 12.7601766 CRRC Corp-A @@@ 46,473 13.20 14.55 10 H 29.7 26.0 3.6 1.2 12.7

3311 China State Construction 6,123 11.70 12.20 4 H 10.8 9.4 2.0 2.8 19.9Real Est at e Inv est ment T rust

2778 Champion REIT 2,941 3.95 4.78 21 B nmf nmf 0.5 4.9 2.3778 F ortune REIT 1,898 7.80 9.20 18 B nmf nmf 0.6 6.0 3.8

6139 J inmao Inv estment 1,187 4.60 5.49 19 B nmf nmf 1.1 9.7 3.9808 Prosperity REIT 525 2.83 3.06 8 B nmf nmf 0.6 6.1 3.6435 Sunlight REIT 818 3.87 4.26 10 B nmf nmf 0.5 5.7 2.9823 Link REIT 13,702 47.15 47.80 1 B nmf nmf 0.9 3.9 25.4

Rest au rant s538 Ajisen China 463 3.29 5.40 64 F V 11.1 10.8 1.1 5.4 9.9341 Caf?de Coral 1,922 25.55 28.00 10 H 25.1 23.7 4.0 3.1 15.9

Ret ailers814 Beijing J ingkelong 106 1.99 1.50 -25 F V 20.9 17.2 0.4 6.1 2.0653 Bonjour Holdings 139 0.32 0.38 21 H 2.3 10.6 0.9 3.3 53.5116 Chow Sang Sang 1,162 13.30 20.33 53 B 6.7 7.4 0.9 5.7 14.9330 Esprit Holdings 2,157 8.60 6.10 -29 F V n.a. n.a. 1.4 n.a. -25.7709 Giordano 776 3.83 4.25 11 H 13.5 12.3 2.0 7.0 15.2

3308 Golden Eagle % 2,177 9.99 8.54 -15 H 14.6 14.5 2.4 2.5 17.6493 Gome Elec Appliances % 2,910 1.33 1.26 -5 H 13.7 12.5 1.0 2.9 7.8

3389 Hengdeli 660 1.07 0.95 -11 F V 10.5 9.7 0.7 2.9 6.51833 Intime Department Store 2,112 7.51 10.00 33 B 11.6 10.1 1.2 4.7 10.9

J D US J D.com ^^@ 42,436 30.68 41.66 36 B 1,418.7 152.1 7.6 0.0 -5.1980 Lianhua Supermarket 472 3.27 4.14 27 H 132.6 111.2 0.9 0.0 0.7

Source: DBS Vickers

^ EPS and Net Profit exclude fair value changes on investment properties; % - Fully Diluted EPS; # P/NAV; ^^Core profit and EPS; '@ denominated in USD ; @@@ denominated in RMB

Market Focus

Monthly market wrap

Page 32


St oc kcode St oc k name

M k tCap

(US$m)

SharePric e

(HK $)

T argetPric e

(HK $)upside

(% ) RemdPE (x )

15FPE (x )

16FPB (x )

15FY ld (% )

15FRO E (% )

15FRet ailers ( c ont 'd )

1212 Lifesty le 2,440 11.80 10.83 -8 H 9.7 10.0 1.6 5.0 17.3590 Luk F ook 1,344 17.68 20.75 17 B 6.4 9.8 1.2 6.2 20.0825 New World Dept Stores 268 1.23 1.35 10 H 29.8 8.9 0.3 6.4 1.1

1438 Nirv ana Asia Ltd 766 2.20 3.05 39 B 15.0 13.0 2.2 3.3 15.3398 Oriental Watch 78 1.06 1.17 10 H 134.2 37.7 0.3 0.9 0.2

3368 Parkson 346 0.99 0.61 -38 F V 183.3 19.3 0.4 6.1 0.2002336 Renrenle Commercial Group@@@ 640 12.40 8.57 -31 F V n.a. n.a. 2.1 0.0 -15.6

178 Sa Sa 976 2.66 3.14 18 H 9.0 17.0 3.1 8.8 35.01700 Springland Int'l 572 1.82 1.91 5 H 7.3 7.2 0.7 5.5 10.06808 Sun Art Retail Group 7,495 6.09 5.20 -15 F V 19.2 18.6 2.3 2.2 12.2

891 Trinity Ltd 259 1.15 1.00 -13 H n.a. 27.3 0.6 n.a. -0.21025 Wumart ^^ 925 5.57 6.22 12 - 20.4 20.2 1.3 0.0 7.0

Sof t w are & Comput er Serv ic es1310 HKBN Ltd. 1,296 9.99 11.00 10 B 96.3 28.4 6.6 3.9 6.6

268 Kingdee 1,410 3.75 3.80 1 B 38.1 29.2 2.5 0.4 8.5700 Tencent ^^ 187,156 154.30 184.00 19 B 35.3 27.4 11.2 0.3 31.8

600588 Yony ou Network Tech@@@ 6,458 28.30 17.00 -40 F V 81.1 62.3 7.1 0.7 10.1St eel, alumin ium & copper

347 Angang Steel 2,828 3.03 5.73 89 B 61.4 35.3 0.4 0.4 0.6000898 Angang Steel-A @@@ 4,256 4.56 4.99 9 H 112.2 64.5 0.7 0.2 0.6600019 Baoshan Iron & Steel Co-A@@@ 14,109 5.48 9.09 66 B 22.1 14.9 0.8 3.3 3.6

1378 China Hongqiao Group 3,122 3.80 4.45 17 H 4.1 3.2 0.5 6.2 13.9323 Maanshan I & S 1,619 1.63 1.32 -19 F V nm nm 0.5 0.0 -10.0

600808 Maanshan I & S-A @@@ 3,259 3.28 1.45 -56 F V nm nm 1.2 0.0 -10.0486 United Co RUSAL PLC 5,234 2.67 4.06 52 B 6.0 12.1 1.5 0.0 30.9

T elec om Serv ic es (Ch ina)941 China Mobile 232,727 88.10 133.00 51 B 11.9 11.7 1.6 3.6 13.9762 China Unicom 29,660 9.60 11.80 23 B 13.3 14.4 0.8 2.5 6.1728 China Telecom 39,678 3.80 4.70 24 B 12.2 12.1 0.8 2.4 7.0

T elec om Serv ic es (HK )1883 CITIC Telecom 1,304 2.99 3.60 20 B 12.9 12.5 1.5 3.8 11.56823 HKT Trust 9,593 9.82 9.10 -7 H 23.1 22.2 2.0 5.3 8.6

215 Hutchison Telecom 1,679 2.70 2.70 0 H 14.3 14.9 1.1 5.2 8.0315 SmarTone 1,583 11.56 15.00 30 B 13.0 13.9 3.2 5.2 26.6

T ranspo rt at ion - Po rt s & A irport s694 Beijing Capital Intl A irport 4,833 8.65 9.65 12 B 18.7 17.0 1.7 2.1 9.2144 China Merchants Hldgs 8,449 25.20 35.00 39 B 11.6 11.3 0.9 3.3 8.1

1199 COSCO Pacific 3,838 10.03 13.00 30 B 12.5 11.4 0.8 3.2 6.4Ut it ilies

1816 CGN Power 17,591 3.00 4.52 51 B 18.4 15.9 2.0 1.6 10.7Warehouse

925 Beijing Properties 489 0.56 0.70 25 B n.a. n.a. 0.8 0.0 -1.4600340 China F ortune Land Dev@@@ 10,647 25.74 31.60 23 B 14.3 11.4 5.0 0.7 40.9

1668 China South City 1,827 1.77 1.94 10 H 3.6 19.7 0.5 8.3 16.6200053 Shenzhen Chiwan Petroleum 729 16.15 21.48 33 B 28.7 31.1 0.8 0.3 6.0

Source: DBS Vickers

@@ denominated in SGD; @@@ denominated in RMB

% - Fully Diluted EPS; ^^Core profit and EPS

Market Focus

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M k tCap

(US$m)

SharePric e

(HK $ )

T argetPric e

(HK $ )up s ide

(% ) RemdPE ( x )

15FPE (x )

16FPB ( x )

15FY ld (% )

15FRO E (% )

15FW at er In f rast ruc t u re, Env ironmen t al

371 Beijing Enterprises Water % 6,820 6.06 6.50 7 B 22.5 18.3 3.0 1.3 14.0300070 Beijing Originwater@@@ 9,614 50.02 56.80 14 B 45.7 30.8 4.3 0.2 13.3

1381 Canv est Env ironment Protection 802 3.11 4.00 29 B 26.9 16.6 2.4 0.0 9.5257 China Ev erbright Intl 6,791 11.74 13.80 18 B 24.9 18.9 2.9 1.2 12.3

CEWL SP China Ev erbright Water @@ 1,228 0.67 0.79 19 B 21.5 16.7 1.3 1.4 6.61363 CT Env ironmental Group 2,078 2.55 2.90 14 B 21.5 17.4 5.0 0.9 28.56136 Kangda International 581 2.18 2.60 19 B 11.1 8.1 1.2 0.0 11.0

SIIC SP SIIC Env ironment @@ 1,200 0.76 0.92 21 H 20.4 16.5 1.5 0.0 8.31065 Tianjin Cap Env ironmental 1,190 6.46 3.50 -46 S 20.7 19.3 1.7 1.0 8.5

600874 Tianjin Cap Env ironmental-A @@@ 2,042 11.09 7.50 -32 S 43.3 40.2 3.6 0.5 8.5CEL SP CITIC Env irotech @@ 1,325 1.66 1.60 -4 B 50.9 21.7 2.4 0.2 4.9

Source: DBS Vickers

@@ denominated in SGD; @@@ denominated in RMB

% - Fully Diluted EPS

Market Focus

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DBSV recommendations are based an Absolute Total Return* Rating system, defined as follows:

STRONG BUY (>20% total return over the next 3 months, with identifiable share price catalysts within this time frame)

BUY (>15% total return over the next 12 months for small caps, >10% for large caps)

HOLD (-10% to +15% total return over the next 12 months for small caps, -10% to +10% for large caps)

FULLY VALUED (negative total return i.e. > -10% over the next 12 months)

SELL (negative total return of > -20% over the next 3 months, with identifiable catalysts within this time frame)

Share price appreciation + dividends

GENERAL DISCLOSURE/DISCLAIMER

This report is prepared by DBS Vickers (Hong Kong) Limited (DBSVHK) This report is solely intended for the clients of DBS Bank Ltd, DBS Vickers Securities (Singapore) Pte Ltd and DBSVHK, its respective connected and associated corporations and affiliates (collectively, the “DBS Vickers Group”) only and no part of this document may be (i) copied, photocopied or duplicated in any form or by any means or (ii) redistributed without the prior written consent of DBSVHK. The research set out in this report is based on information obtained from sources believed to be reliable, but we (which collectively refers to DBS Vickers Group, its respective connected and associated corporations, affiliates and their respective directors, officers, employees and agents (collectively, the “DBS Group”)) do not make any representation or warranty as to its accuracy, completeness or correctness. Opinions expressed are subject to change without notice. This document is prepared for general circulation. Any recommendation contained in this document does not have regard to the specific investment objectives, financial situation and the particular needs of any specific addressee. This document is for the information of addressees only and is not to be taken in substitution for the exercise of judgement by addressees, who should obtain separate independent legal or financial advice. The DBS Group accepts no liability whatsoever for any direct, indirect and/or consequential loss (including any claims for loss of profit) arising from any use of and/or reliance upon this document and/or further communication given in relation to this document. This document is not to be construed as an offer or a solicitation of an offer to buy or sell any securities. The DBS Group, along with its affiliates and/or persons associated with any of them may from time to time have interests in the securities mentioned in this document. The DBS Group may have positions in, and may effect transactions in securities mentioned herein and may also perform or seek to perform broking, investment banking and other banking services for these companies. Any valuations, opinions, estimates, forecasts, ratings or risk assessments herein constitutes a judgment as of the date of this report, and there can be no assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments. The information in this document is subject to change without notice, its accuracy is not guaranteed, it may be incomplete or condensed and it may not contain all material information concerning the company (or companies) referred to in this report. The valuations, opinions, estimates, forecasts, ratings or risk assessments described in this report were based upon a number of estimates and assumptions and are inherently subject to significant uncertainties and contingencies. It can be expected that one or more of the estimates on which the valuations, opinions, estimates, forecasts, ratings or risk assessments were based will not materialize or will vary significantly from actual results. Therefore, the inclusion of the valuations, opinions, estimates, forecasts, ratings or risk assessments described herein IS NOT TO BE RELIED UPON as a representation and/or warranty by the DBS Group (and/or any persons associated with the aforesaid entities), that: (a) such valuations, opinions, estimates, forecasts, ratings or risk assessments or their underlying assumptions will be achieved, and (b) there is any assurance that future results or events will be consistent with any such valuations, opinions, estimates, forecasts, ratings or risk assessments stated therein. Any assumptions made in this report that refers to commodities, are for the purposes of making forecasts for the company (or companies) mentioned herein. They are not to be construed as recommendations to trade in the physical commodity or in the futures contract relating to the commodity referred to in this report. DBS Vickers Securities (USA) Inc ("DBSVUSA")"), a U.S.-registered broker-dealer, does not have its own investment banking or research department, has not participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months and does not engage in market-making. ANALYST CERTIFICATION The research analyst(s) primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views. The analyst(s) also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report. As of 1 December 2015, the analyst(s) and his/her spouse and/or relatives who are financially dependent on the analyst(s), do not hold interests in the securities recommended in this report (“interest” includes direct or indirect ownership of securities).

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COMPANY-SPECIFIC / REGULATORY DISCLOSURES 1 DBS Bank Ltd., DBS Vickers Securities (Singapore) Pte Ltd (“DBSVS”), DBSVHK, their subsidiaries and/or other affiliates have

proprietary positions in Fortune Real Estate Investment Trust, Jinmao Investments & Jinmao (China), Bank Of China Limited, Hkbn Limited, Hutchison Telecommunications Hong Kong Holdings Limited, China Railway Group Limited, Hkt Trust & Hkt Limited, Smartone Telecommunications Holdings Ltd, China Railway Construction Corporation Limited, Prosperity Real Estate Investment Trust, China Telecom Corporation Limited, Haier Electronics Group Company Limited, Guangzhou Automobile Group Company Limited, China Communications Construction Company Limited, Link Real Estate Investment Trust, Agricultural Bank Of China Limited, China Merchants Bank Company Limited, China Unicom (Hong Kong) Limited, Boc Hong Kong (Holdings) Limited, Anhui Conch Cement Company Limited, China Mengniu Dairy Company Limited, Sinopharm Group Company Limited, Tsingtao Brewery Company Limited, Tencent Holdings Limited, Sun Hung Kai Properties Limited, Hysan Development Company Limited, Henderson Land Development Company Limited, Li & Fung Limited, Hsbc Holdings Public Limited Company, Mtr Corporation Limited, China Merchants Holdings International Company Limited, Hengan International Group Company Limited, Industrial & Commercial Bank Of China Limited, China Mobile Limited, Bank Of Communications Company Limited, Beijing Capital International Airport, Brilliance China Automotive Holdings Limited, The Wharf Holdings Limited, China Overseas Land & Investment Limited, China National Building Material, China Minsheng Banking Corporation Limited, China Resources Land Limited, Dongfeng Motor Group Company Limited, China Citic Bank Corporation Limited, Crrc Corporation Limited, Belle International Holdings Limited, Zte Corporation, Tencent Holdings Limited, Want Want China Holdings Limited, China Railway Construction Corporation Limited, China Telecom Corporation Limited, Cheung Kong Property Holdings Limited, China Communications Construction Company Limited, China Vanke Company Limited 'H', China Merchants Bank Company Limited, Beijing Enterprises Water Group Limited, Geely Automobile Holdings Limited, Hsbc Holdings Public Limited Company, China Mobile Limited, Samsonite International Sa, Industrial & Commercial Bank Of China Limited, China Resources Land Limited, New World Development Company Limited, China State Construction International Holdings Limited, China Overseas Land & Investment Limited, Fortune Real Estate Investment Trust, Sino-Ocean Land Holdings Limited, Great Wall Motor Company Limited, Industrial & Commercial Bank Of China Limited, Sinopharm Group Company Limited, Boc Hong Kong (Holdings) Limited, Bank Of China Limited, Geely Automobile Holdings Limited, Gome Electrical Appliances Holding Limited, China Construction Bank Corporation, CK Hutchison Holdings Limited, Cheung Kong Property Holdings Limited, Cgn Power Company Limited, China Everbright Limited, Brilliance China Automotive Holdings Limited, China Construction Bank Corporation, Bank Of China Limited, Agricultural Bank Of China Limited, Anhui Conch Cement Company Limited, Bank Of Communications Company Limited, Baoshan Iron & Steel Company Limited, China Citic Bank Corporation Limited, China Communications Construction Company Limited, China Construction Bank Corporation, China Merchants Bank Company Limited, China Minsheng Banking Corporation Limited, China Railway Construction Corporation Limited, CRRC Corporation Limited, China Vanke Company Limited, Great Wall Motor Company Limited, Industrial & Commercial Bank Of China Limited, Hongkong Land Holdings Limited and Yanlord Land Group Limited recommended in this report as of 26 Nov 2015.

2 DBS Bank Ltd., DBSVS, DBSVUSA, DBSVHK their subsidiaries and/or other affiliates beneficially own a total of 1% of any class of common equity securities of Fortune Real Estate Investment Trust recommended in this report as of 26 Nov 2015.

3 Compensation for investment banking services: DBS Bank Ltd., DBSVS, DBSVHK, their subsidiaries and/or other affiliates of DBSVUSA have received compensation, within the past 12 months for investment banking services from Purapharm Corporation Limited, China Jinmao Holdings, Nirvana Asia Limited and Yuexiu Property Company Limited as of 31 Oct 2015. DBS Bank Ltd., DBSVS, DBSVHK, their subsidiaries and/or other affiliates of DBSVUSA have managed or co-managed a public offering of securities for Nirvana Asia Limited in the past 12 months recommended in this report as of 31 Oct 2015. DBSVUSA does not have its own investment banking or research department, nor has it participated in any public offering of securities as a manager or co-manager or in any other investment banking transaction in the past twelve months. Any US persons wishing to obtain further information, including any clarification on disclosures in this disclaimer, or to effect a transaction in any security discussed in this document should contact DBSVUSA exclusively.

Market Focus

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General This report is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

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Hong Kong This report is being distributed in Hong Kong by DBS Vickers (Hong Kong) Limited which is licensed and regulated by the Hong Kong Securities and Futures Commission.

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Malaysia This report is distributed in Malaysia by AllianceDBS Research Sdn Bhd ("ADBSR"). Recipients of this report, received from ADBSR are to contact the undersigned at 603-2604 3333 in respect of any matters arising from or in connection with this report. In addition to the General Disclosure/Disclaimer found at the preceding page, recipients of this report are advised that ADBSR (the preparer of this report), its holding company Alliance Investment Bank Berhad, their respective connected and associated corporations, affiliates, their directors, officers, employees, agents and parties related or associated with any of them may have positions in, and may effect transactions in the securities mentioned herein and may also perform or seek to perform broking, investment banking/corporate advisory and other services for the subject companies. They may also have received compensation and/or seek to obtain compensation for broking, investment banking/corporate advisory and other services from the subject companies.

Wong Ming Tek, Executive Director, ADBSR

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Thailand This report is being distributed in Thailand by DBS Vickers Securities (Thailand) Co Ltd. Research reports distributed are only intended for institutional clients only and no other person may act upon it.

United Kingdom

This report is being distributed in the UK by DBS Vickers Securities (UK) Ltd, who is an authorised person in the meaning of the Financial Services and Markets Act and is regulated by The Financial Conduct Authority. Research distributed in the UK is intended only for institutional clients.

Dubai

This research report is being distributed in The Dubai International Financial Centre (“DIFC”) by DBS Bank Ltd., (DIFC Branch) having its office at PO Box 506538, 3rd Floor, Building 3, East Wing, Gate Precinct, Dubai International Financial Centre (DIFC), Dubai, United Arab Emirates. DBS Bank Ltd., (DIFC Branch) is regulated by The Dubai Financial Services Authority. This research report is intended only for professional clients (as defined in the DFSA rulebook) and no other person may act upon it.

United States This report was prepared by DBSVHK. DBSVUSA did not participate in its preparation. The research analyst(s) named on this report are not registered as research analysts with FINRA and are not associated persons of DBSVUSA. The research analyst(s) are not subject to FINRA Rule 2241 restrictions on analyst compensation, communications with a subject company, public appearances and trading securities held by a research analyst. This report is being distributed in the United States by DBSVUSA, which accepts responsibility for its contents. This report may only be distributed to Major U.S. Institutional Investors (as defined in SEC Rule 15a-6) and to such other institutional investors and qualified persons as DBSVUSA may authorize. Any U.S. person receiving this report who wishes to effect transactions in any securities referred to herein should contact DBSVUSA directly and not its affiliate.

Other jurisdictions

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Documents

1201 Monthly market wrap v2 - DBS Bank Market Focus Monthly market wrap Page 2 ETF flows Hong Kong and H-share ETFs saw inflows of HK$0.3bn in November. This is the first inflow seen